Earnout clause samples

The aggregate purchase price for the Acquisition is a maximum of $17.0 million, consisting of payments in cash and stock, a working capital adjustment, and contingent consideration in the form of deferred purchase price payments and an earnout. Additionally, the parties made a 338(h)(10) election to treat the Acquisition as a purchase and sale of assets, and the Company has agreed to pay any incremental taxes of Sellers resulting from that election.

In 2020, the difference between the statutory and effective tax rate is due primarily to permanent differences between U.S. GAAP book income and taxable income including the goodwill impairment charge for the CommAgility reporting unit and the loss on contingent consideration related to the Holzworth earnout. Additionally, in 2020 the difference between the statutory and effective tax rate was due to an increase in the state net operating loss valuation allowance and research and development deductions in the United Kingdom. In 2019, the difference between the statutory and effective tax rate is due primarily to research and development deductions in the United Kingdom and a reduction in the state net operating loss valuation allowance.

(a) First Earnout. During the period commencing on the date that a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination between the Company and one or more businesses (a “Business Combination”) is consummated through the tenth anniversary following the consummation of such Business Combination (the “Earnout End Date”), unless (a) the closing price of the Company’s Class A ordinary shares (or any successor class of common shares listed on The New York Stock Exchange or The Nasdaq Stock Market) equals or exceeds $15.00 per share (as adjusted for share splits, dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30 consecutive trading day period or (b) the Company completes a liquidation, merger, share exchange or other similar transaction that results in all of its common shareholders having the right to exchange their common equity for consideration in cash, securities or other property or any transaction involving a consolidation, merger, proxy contest, tender offer or similar transaction in which the Company is the surviving entity which results in a change in the majority of our board of directors or management team or the company’s stockholders immediately prior to such transaction ceasing to own a majority of the surviving entity immediately after such transaction (each a “First Earnout Condition”), on the Earnout End Date or promptly thereafter (the “Earnout Forfeiture Date”), the Subscriber acknowledges and agrees that it shall surrender for no consideration any and all rights to such number of Shares (including any Class A ordinary shares or Class C ordinary shares into which such Shares have converted) equal to 50.0% of the Shares held by the Subscriber immediately following the Company’s IPO (after accounting for any forfeitures required pursuant to Section 3.2 hereto but assuming no exercise of the Over-allotment Option), or 3,397,500 Shares (the “First Earnout Shares”).

(a) Second Earnout. During the period commencing on the date that a Business Combination is consummated through the Earnout End Date, unless (a) the closing price of the Company’s Class A ordinary shares (or any successor class of common shares listed on The New York Stock Exchange or The Nasdaq Stock Market) equals or exceeds $17.00 per share (as adjusted for share splits, dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30 consecutive trading day period or (b) the Company completes a liquidation, merger, share exchange or other similar transaction that results in all of its common shareholders having the right to exchange their common equity for consideration in cash, securities or other property or any transaction involving a consolidation, merger, proxy contest, tender offer or similar transaction in which the Company is the surviving entity which results in a change in the majority of our board of directors or management team or the company’s stockholders immediately prior to such transaction ceasing to own a majority of the surviving entity immediately after such transaction (each a “Second Earnout Condition”), on the Earnout Forfeiture Date, the Subscriber acknowledges and agrees that it shall surrender for no consideration any and all rights to such number of Shares (including any Class A ordinary shares or Class C ordinary shares into which such Shares have converted) equal to 50.0% of the Shares held by the Subscriber immediately following the Company’s IPO (after accounting for any forfeitures required pursuant to Section 3.2 hereto but assuming no exercise of the Over-allotment Option), or 3,397,500 Shares (the “Second Earnout Shares”).

Change in Fair Value of Contingent Earnout Consideration.The Company continuously examines actual results in comparison to financial metrics utilized in each of our earnout calculations and assesses the carrying value of the contingent earnout consideration. During the nine-month period ended September 30, 2016, the Company recorded a change in fair value of the estimated earnout consideration to be achieved (as a result of delays in the timing of forecasted revenue). This change in estimate resulted in a reversal of $798 thousand related to the Branchbird contingent earnout as well as a reversal of $130 thousand related to the Zero2Ten contingent earnout. No changes in fair value were made during the three-month period ended September 30, 2016.

6.20 Earnout. Following the Closing, the parties shall comply with the provisions of Article III.

(g)Tax Treatment of Earnout. The Parties agree that any amounts paid to Seller under this Section 3 shall be treated as an adjustment to the Purchase Price paid by Buyer pursuant to this Agreement for all tax purposes. Seller hereby agrees to report for all tax purposes (including in connection with any tax return) any income in respect of any amounts payable under this Section 3 in a manner that is consistent with the foregoing and applicable Law.

As disclosed in the Company’s Current Report on Form 8-K, filed with the SEC on February1, 2016, the Merger Agreement provides that the Company will seek stockholder approval for the issuance of the shares of common stock pursuant to the Earnout in order to comply with the NASDAQ Approval Rules. Other than the NASDAQ Approval Rules, no other rules, regulations or laws require the Company to obtain stockholder approval for the merger or the transactions contemplated by the Merger Agreement, including the issuance of the shares of the Company’s common stock pursuant to the Earnout. Once the Company’s shares of common stock were delisted from NASDAQ, the Company was no longer subject to the NASDAQ Approval Rules and, as a result, the Company may issue the shares of its common stock to the former members of AEON pursuant to the Earnout without obtaining stockholder approval. Notwithstanding the fact that the Company is under no legal obligation to obtain stockholder approval for the issuance of the shares of common stock pursuant to the Earnout, the Company has decided to seek stockholder approval for the shares of its common stock issuable to the former members of AEON pursuant to the Earnout because the Company believes that it may be difficult to relist its shares of common stock on NASDAQ or any other national securities exchange without obtaining this approval. A relisting of the common stock on NASDAQ or another national securities exchange would be in the best interests of the unaffiliated stockholders of the Company, including, but not limited to, (1)increased regulatory oversight of the Company; (2)more liquidity in the Company’s common stock; and (3)increased investor confidence in the Company.